The child-killer's £250,000 taxpayer-funded legal bid to be transferred was the first time he had been seen in public for decades and was criticised by victims' families who said it was a circus and a complete waste of taxpayers' money.

Brady, who murdered five children in the 1960s with his lover Myra Hindley, was jailed for life in 1966.

The decision to reject his appeal was given by Atherton, who chaired the three-man tribunal panel at Ashworth.

At the end of the hearing, the panel said Brady should remain in Ashworth on the grounds that he is insane and hospital staff are best placed to treat his psychosis.

Atherton said: "The tribunal concluded that it has been demonstrated by this evidence that it is necessary in the interests of his own health and safety that he be detained in hospital for treatment and that appropriate treatment is available.

"The tribunal considered that it would be inappropriate to make any recommendation because, in its judgment, it is not appropriate to recommend his discharge."

The 116-page ruling says Brady's wishes must be taken into consideration.

"His views are important because he will spend the rest of his life either in a hospital or in prison. There is no possibility of him being discharged into the community.

"However, the determination of that issue depends substantially upon his mental condition, about which there is an array of opinions among the medical practitioners who gave evidence to the tribunal."

The tribunal said that with the benefit of hindsight Brady should have been transferred to hospital for treatment before he had served 19 years in various prisons.

The ruling adds: "One must also remember that he is now a 75-year-old man. When he was in prison he was much younger. He is now physically much weaker. But his notoriety has not diminished.

"The inmates of a prison would not be selected as the other patients on the ward are. That would create a significant risk to his safety, even though the prison officers are acknowledged to have the skills to deal with such issues."

The tribunal accepted that Brady is suffering from chronic psychotic illness but there were differences in eminent medical opinion demonstrating the complexity of his condition.

The ruling quoted from his medical history, citing case notes prior to his sentence in 1966 by Dr Lindsay Neustatter, senior physician in psychological medicine, describing Brady as "a ruthless individual, cold and unemotional, without conscience or remorse … He showed a pathological admiration of power and unscrupulousness".

Another medical officer later wrote: "[Brady is a] schizoid psychopath of utter untruthfulness who has the rather unusual ability in this type of personality of dissociating himself from the crimes of which he has been convicted … Increasingly I feel that it is a symptom of the terrifying intensity of his psychopathy, and that he is not defending against recalling his offences but that, as far as he is concerned, they fail to rise above his mental horizon."

Brady has the right to challenge the decision, which would require a further hearing at an upper tribunal.

There was no immediate response from his legal team to the findings.

Brady told the hearing that he was merely a a petty criminal and described his crimes as recreational killings which were part of an existential experience.

Brady's legal team argued that, despite his severe personality disorder, he is not mentally ill and therefore no longer fulfils the legal criteria for detention in hospital.

Brady has suggested that if he is allowed to go back to a jail he would be free to end his own life by starving himself to death.

Last year's tribunal heard that Brady, who claims to have been on a hunger strike since 1999 and is fed through a tube in his nose, in fact eats toast and soup and that this is simply a protest rather than suicidal.

It was suggested that Brady's legal bid showed his pathological need for control and to challenge authority and a craving for the public spotlight.

Hospital records showed that Brady has hallucinations, talks to himself while alone, has been violent and abusive to other patients and staff, and leads a largely nocturnal existence, leaving his room at night only, and shunning other patients and staff he regards as beneath him.

Brady and Hindley lured children and teenagers to their deaths, before burying four youngsters on Saddleworth moor above Manchester.